Goldman Sachs downgrades Intel shares to sell due to its chip ‘manufacturing issues’

Intel's chip manufacturing technology issues are a big problem, according to Goldman Sachs.
The firm lowered its rating to sell from neutral for Intel shares,
citing its repeated delays in moving to its next generation chip process
technology.

"We see Intel's struggles with 10nm process technology having
ramifications in terms of its competitive position - across a broad set
of products," analyst Toshiya Hari said in a note to clients Friday.
"While the 10nm push is well-publicized at this point, we believe
Intel's manufacturing issues could potentially be deeper-rooted than
what most think and could have a sustained impact on market share and/or
spending levels as Intel competes with a growing/stronger TSMC
eco-system."

Intel shares are down 2.5 percent Friday after the report. Its stock is
up 8.6 percent this year through Thursday versus the S&P 500's 6.7
percent return.

The analyst noted the company's repeated delays in moving to the 10
nanometer chip process. Intel said last month that its 10 nanometer
chips will be released for holiday 2019 compared with AMD's 7 nanonmeter
products' launch later this year.

"Note any slowdown in the Enterprise spending environment (although this
is not our base case view) would also add to the earnings decline we
forecast in 2019," he said.

When asked for comment, an Intel spokesperson pointed to this statement
by company executive vice president Navin Shenoy at its Data Centric
Innovation Summit Wednesday:

"I don't talk to customers about nanometers, what they care about is
delivered system-level performance. Our job is to deliver a consistent
level of improvements in performance year after year after year. The
roadmap we laid out to them several quarters ago and the one we shared
today does exactly that."